Too late to start planning for hard Brexit with no deal, says financier

Dermot Rafferty of Ernst & Young tells the Charity Tax Group's annual conference that there could still be time to plan for an agreed exit or extended talks

It is too late for charities to start planning for a hard Brexit if the UK leaves the European Union without a deal next year, delegates at the Charity Tax Group’s annual conference have heard.

Dermot Rafferty, senior manager at the professional services firm Ernst & Young, told the conference in London yesterday that charities needed to have been planning for the possibility that issues such as the Irish border and the customs union would cause the UK to depart the EU abruptly without a deal in April next year.

"If nothing is agreed, then Brexit day is the day we fall out of the European Union," Rafferty said. "And if you haven’t started planning for that eventuality, it is too late."

But Rafferty told Third Sector there was still time for charities to plan for the UK’s exit from the EU if a transition agreement or a deal was agreed or if the talks were extended for another year until 2020.

He said charities that were reliant on direct or indirect funding from the EU should urgently plan for how that funding could be replaced.

Rafferty said there were some opportunities and the government was likely to want a good news story to announce once Brexit is agreed.

This meant that charities should try to propose ideas that are attractive to the government and HM Revenue & Customs and which stand out among proposals made by other sectors.

Also speaking at the conference, Matthew Bowcock, chair of the Philanthropy Collaborative, said that charities needed to focus more on getting ultra-high net worth individuals – those with liquid assets of more than £10m – to give more to charity.

He said ultra-high net worth people gave away only 0.12 per cent of their £1.4tn of assets, and only 10 per cent of the 18,000 ultra-high net worth individuals in the UK actually engaged with civil society.

"If we could double that community over the next 10 years from 1,800 to 3,600 people, from 10 per cent to 20 per cent of the ultra-high net worth who are engaged in some sort of generous philanthropic giving to civil society, that will represent £2bn a year," Bowcock said.

"That would be enough to fund every single year Cancer Research, Oxfam, the British Red Cross, Macmillan, the RNLI, the RSPCA and the NSPCC combined."

Robert Jenrick MP, Exchequer Secretary to the Treasury, told the conference that he wanted to be "your voice within government" and someone "who is there to listen to you and ensure the system works for you".

He said that recent changes to the Budget, which now takes place once a year in the autumn, will help the Treasury to work with groups and have more time engaging with the sector before taking decisions, and give charities more time to adapt.

In response to a question on raising the Gift Aid Small Donations Scheme cap from £20 to £30, in line with contactless payments, Jenrick said: "There is obviously a logic to it that I can see, and it is something we will give further thought to. The argument is clear that it would be sensible to put it in line with contactless payments."

He also called for firms developing software products for companies and charities incorporating HMRC’s Making Tax Digital project to follow PwC’s lead and give charities free access.